Coinbase Stranded After SEC’s Absurd Claims: “Only Bitcoin Is Not A Security”?

crypto Coinbase
crypto Coinbase

Coinbase's share price plummeted by more than 10% recently, after a surprising revelation by Brian Armstrong, its CEO.

Why did this happen?

Before filing a lawsuit against the company last month, the Securities and Exchange Commission (SEC) allegedly asked Coinbase (CB) to cease trading in all cryptocurrencies other than Bitcoin (BTC). CEO Brian Armstrong said, according to a Financial Times report.

Read on and find out the real reason behind Coinbase's share price drop, and the "absurd" request the SEC made before it all.

SEC vs Coinbase: Case Background

The SEC launched a complaint against CB last month, alleging that it was acting as an unregistered securities broker.

The government agency also accused Coinbase of illegally earning "billions of dollars" in profit while operating as an unlicensed securities dealer in its lawsuit.

The government and the cryptocurrency sector have been at loggerheads over the last few years, in an effort from the SEC to tag seemingly every other cryptocurrency (aside from bitcoin) as securities.

Paul Grewal, the chief legal officer of Coinbase, responded to the SEC's lawsuit by claiming that the agency's measures against the cryptocurrency market were "hurting America's economic competitiveness" and "companies like Coinbase that have a demonstrated commitment to compliance."

The SEC's Demands From CoinBase

Remember that the SEC previously filed a lawsuit against Binance in June for selling unregistered securities and letting American investors access its international website

The Wall Street regulator also claimed that Changpeng Zhao, the CEO of Binance, and the cryptocurrency exchange had misappropriated and mixed up consumers' money.

In this recent train of happenings, however, the SEC has requested that Coinbase delist all cryptocurrencies other than bitcoin (BTC), according to reports from the company's CEO, Brian Armstrong in a Financial Times report.

Did Coinbase Take The Bait?

Take a minute to take in the SEC's absurd request, and what might have happened if one of the largest crypto exchanges in the world had agreed to delist everything else, asides from Bitcoin.

Armstrong also said that if Coinbase had complied with the request, it may have created a massive chain reaction that would see the SEC taking action against the majority of American cryptocurrency firms that operate in a similar manner.

Nobody would be safe.

Armstrong is quoted as saying that the SEC's request gave Coinbase no other option than to go to court.

"We (Coinbase) really didn't have a choice at that point, delisting every asset other than Bitcoin, which by the way is not what the law says, would have meant the end of the crypto industry in the US,"

Armstrong is quoted to have said.

$COIN's Reaction To The News

According to the charts, $COIN, Coinbase's stock plummeted by more than 10% over the last 24 hours, from $102.35 to $91.94.

COIN Price movement
COIN Price movement

In the charts, we can see that $COIN was already in a decline, to begin with and that the SEC's request only added a 10% dip to the mix.

The stock appears to be correcting its trajectory and has even regained some footing from $91.94 to $96.18 where it now sits.

Stock prices are a lot less volatile than crypto prices, and it is possible that $COIN's dip was only a flash dip or an overreaction from traders.

COIN's overbought RSI lines
COIN's overbought RSI lines

Coinbase's overbought RSI lines

However, it is also possible that prices may move further downwards as time goes by.

This might happen because the RSI line is teetering towards the overbought zone, while the RSI-based MACD is fully inside the overbought zone.

Both of these paint a slightly bearish picture and should be considered before opening any new trades.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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